Sunday, October 24, 2010

If you’re anything like I was, you are not making the decision to file bankruptcy lightly. That was, by far, the hardest part of my bankruptcy. It was difficult to justify my reasons for bankruptcy because bankruptcy went against everything I’d been taught all my life.

It was a struggle, but once I conceded the fact that it was going to have to happen, like it or not, and stopped trying to think of an acceptable reason for bankruptcy, things got a whole lot easier.

First off, I’d like to remind you that your reasons to file bankruptcy are personal and you don’t need to justify them (or even explain them) to anyone. However, I do realize that you might be trying to justify your reasons to file for bankruptcy to yourself. That’s not necessary either but I get it.

Most people confuse the causes for bankruptcy with the reasons for bankruptcy.

· Receiving a fresh start. The bankruptcy laws expressly exist to give you a fresh start. You deserve to start fresh if you need to. If you didn’t, these laws would not exist.

· Getting the creditors off your back. Once you file for bankruptcy, an automatic stay goes into effect and your creditors may not contact you from that point forward. They may show up at your 341 hearing (more later about the 341) but you can stop that phone once and for all from that maddening ringing off the hook. Do you even have it on the hook? I didn’t. I couldn’t take it.

· Protecting your family by keeping your assets. You will need to discuss this with an attorney. I am not an attorney and nothing I write is intended to be legal advice....but for many people it is possible to keep essential assets through strategic planning.

It is important to plan your bankruptcy whether you have many assets or none. For tips on choosing the best bankruptcy attorney, visit Bankruptcy Attorney Tips.

Of course, there are good reasons not to file bankruptcy too. These include the facts that bankruptcy can have long-term negative effects on your credit rating, make it hard to find a job and make it hard to rent a place.

My credit was already screwed up, so my bankruptcy discharge actually helped my credit, but I live with the very real possibilities of not being able to find a good job or decent place to live somewhere in the future.

If you decide to start fresh by filing for bankruptcy, I wish you nothing but relief!!

Friday, October 1, 2010

Before I enter another post about my own bankruptcy, I need to dispell a myth. I keep hearing that you can't go bankrupt anymore unless you are Donald Trump or some other mega mogul. This is bugging me because it's flat out wrong.

If you are thinking about going bankrupt, and you are not familiar with how bankruptcy works, you may think that having a successful bankruptcy is next to impossible. You have probably heard that you can’t anymore. And you probably heard this from people who have never had to file for bankruptcy. People who don’t know what they’re talking about.

In 2005 the bankruptcy laws changed and the news from on high was that simple folk like us could no longer declare bankruptcy. Or that is was next to impossible. We believed this news. I know I believed it and was scared to death that I wouldn't be able to file.

It is true that the 2005 bankruptcy law changes made it tougher to file for a chapter 7 bankruptcy. Income and expenses are now used to determine which chapter of bankruptcy a debtor will qualify for. It is now also required that debtors complete credit counseling classes to receive a discharge (don’t worry—these are fairly easy and cheap and can be taken online). The purpose of these changes was to reduce number of people that were wiping out debts that they could afford to pay back.

A chapter 7 bankruptcy is one in which your assets, above and beyond what you can exempt, are liquidated and the proceeds are distributed to your creditors. Don’t panic at that thought! Most of what you have is not worth what you think it is and nobody wants your old furniture or clothing. For more information see Chapter 7 Bankruptcy Information.

More people are forced into a chapter 13 now than before the 2005 bankruptcy code changes. In a chapter 13 bankruptcy, you are determined to have enough income that you can pay some or all of your debts to your creditors and you are put on a payment plan which lasts up to five years. This is a rigid program and you must live up to the terms of your bankruptcy, but it is far easier than swimming in a mountain of debt that you will never be able to pay back.

Don’t get me wrong. Going Bankrupt is a tough thing to go through. Especially emotionally. But it is not as difficult an achievement as a lot of folks would have you believe.

Whether or not absolved of some, most, or all debt, bankruptcy may be the only way back to financial health for the insolvent debtor. Much will depend on your unique situation----no two bankruptcies are alike. Make an appointment with several attorneys to discuss your options. For help selecting your attorney, read my Bankruptcy Attorney Tips.